OREANDA-NEWS. Acme Corporation SIA (hereinafter - ‘the Company’ or ‘Acme Corporation’) and its subsidiaries (hereinafter - ‘the Group’) invest in the operation and management of rental real estates (offices, retail and land development) in Latvia. As at 31 December 2015 Acme Corporation was the parent for three Latvian registered limited liability companies - Neatkarīgā patentu aģentūra SIA (office anchored real estate), Big Truck SIA (logistic development) and Slokas 161 SIA (retail anchored real estate).

Acme Corporation during the year continued the holding company operations.

In October 2014 management signed a share purchase agreement for the sale of subsidiaries Apex Investments SIA (Apex Investments) and Tukums Projekts SIA (Tukuma Projekts) to Hili Properties BV. The sale concluded on 30 January 2015.

Due to the fact that the Group has positive equity and positive net margin, there are no further doubts about its going concern position.

In both office and retail segments rents were stable. Delinquent rents are being well managed at the moment by our property manager.

For the year ended 2015 the Latvian statistics service report inflation at 0.2%. For this reason the Group will be in a position to upward revise rent charges in 2016, where applicable, only marginally.

Retail

At the end of January 2015 Apex Investments and Tukums Projekts were sold.

A separate company SIA Slokas 161 (Slokas 161) for the Slokas property was established early in January 2015 since management did not want to mix grocery anchored retail with other anchored retail. Transfer of Slokas property from Apex Investments to Slokas 161 took place in January 2015. During the year Slokas 161 signed a lease agreement with Lemon Gym for the development of 800 meters of space. The lease will require approximately EUR 150 000 of capital investment. This lease will have a positive impact on the cash flow.

Office

For our offices gross rent has settled to a market rate of EUR 11.00 to EUR 12.00 per square meter per month. There are some historical outliers to the current market rate pulling the offices average below current market. At Citadeles iela 12 the remaining 400 vacant meters have been leased. To prepare the space for occupancy EUR 80 000 will need to be invested.

Land

Management has engaged an architectural firm to prepare the detailed planning for the property. Detailed planning is expected to be complete during 2016. Impairment charge on investment property of EUR 391 500 was recognised in 2016.

Bond

Acme Corporation has made four quarterly repayment of principal to bondholders of record for 2015. Acme Corporation has made all coupon payments on the bonds to date.

During the year a subsidiary of Acme has purchased 3,805 bonds. Acme now directly or indirectly via a subsidiary owns 4,205 bonds. There remain 825 bonds outstanding and free floating on the Riga exchange at close of 2015.

Senior Debt

In March 2015 the debt pertinent to continuing operations was extended until February 2018.

At the time of writing one month EURIBOR is quoted at approximately minus 0.34%. Management has agreed with our Senior lender that our debt has a floor of zero percent. These rates are unprecedentedly low and have positive impact onto the cash flow.

Operational strategy

The Group is focused on conserving its cash flow and internally developing its portfolio. With this in mind, the group has purchased Muižas Parks SIA in January 2016 in order to gain 100% control of the development land in Kekava parish. Nevertheless, the Group is now positive about acquisitions that can add synergy and net positive results to the group as a whole.

Risk Management

The Company seeks to minimise potential adverse effects of identified financial risks. To an extent possible the terms and conditions of the loan to a subsidiary are aligned with those of the bond. Financial assets which expose the Company to high credit risk concentration are cash held at bank and receivables under loan to the subsidiary. The latter is controlled via regular monitoring of the subsidiary’s financial performance. The Company’s counterparties in banking transactions are reputable local banks with adequate credit history.

Events after the balance sheet date

Except for events described in Note 19 to the financial statements, there have been no other events since the last date of the reporting year, which would have a significant effect on the financial position of the Company as at 31 December 2015.

Profit distribution

The management proposes to retain all the profit at the Company’s disposal..

 

Income Statement

  Notes   2015 2014
      EUR EUR
         
Net sales 2   - 500 000
Gain on disposal of subsidiaries 3(a)   5 020 935 -
Costs in relation to disposal of subsidiaries 3(b)   (177 244) -
Gross profit     4 843 691 500 000
Administrative expenses 4   (50 744) (28 480)
Other operating expenses 5   (5 506) (443)
Gain on reversal of impairment on equity investments in subsidiaries     - 28 457
Gain on reversal of bad debt provisions on loan to a subsidiary 14(a)   - 3 185 810
Interest and similar income 14(a)   137 500 237 905
Interest expense and similar charges 13   (170 548) (183 641)
Profit before taxation     4 754 393 3 739 608
Corporate income tax 6   - (50 087)
Deferred tax 6   - -
Profit for the financial year     4 754 393 3 689 521

 

Balance Sheet

  Notes   31.12.2015 31.12.2014
      EUR EUR
Assets        
         
Non-current assets        
Non-current financial investments        
Equity investments in subsidiaries 7(b)   4 809 499 4 805 499
Loan to a subsidiary 14(a)   4 873 086 -
Other securities and investments 8   428 752 455 341
      10 111 337 5 260 840
Current assets        
Non-current assets held for sale 9   - 29 880
Loan to a subsidiary 14(a)   220 079 1 292 787
Receivables from related companies     819 121
Other debtors 10   450 318 -
Other securities and investments 8   28 865 32 213
Cash at bank 11   115 424 15 631
      815 505 1 370 632
         
Total assets     10 926 842 6 631 472
         
Liabilities and Shareholders’ Equity        
         
Shareholders’ equity        
Share capital 12   2 844 2 844
Retained earnings        
a) retained earnings/ (accumulated loss)     366 221 (3 323 300)
b) profit for the current financial year     4 754 393 3 689 521
      5 123 458 369 065
Creditors: amounts falling due after one year        
Non-convertible bonds 13   5 351 975 5 678 461
      5 351 975 5 678 461
Creditors: amounts falling due within one year        
Non-convertible bonds 13   356 439 347 975
Borrowings from related parties 14(b)   66 755 96 755
Payables to suppliers     8 124 4 257
Payables to related companies      14(c)   2 473 76 000
Tax liabilities 15   - 50 087
Accrued expenses     17 618 8 872
      451 409 583 946
         
Total liabilities and shareholders’ equity     10 926 842 6 631 472